Gold – XAU/USD Analysis – July 12, 2021

Upward Channel Breakout

A day before, the precious metal gold closed at $1807.10 after placing a high of $1812.00 and a low of $1794.20. Gold extended its gains and continued its bullish streak for the 7th consecutive session on Thursday. However, the gains were a little too limited as the prices remained primarily flat throughout the session. The U.S. dollar index that gauges the greenback value against the basket of six major rival currencies remained on the back foot on Thursday. The DXY dropped to 92.24 level amid the declining U.S. Treasury Yields. The yields on the benchmark 10-year note continued their bearish streak for the 9th consecutive session and reached their lowest since mid-February level at 1.251%. Lower Treasury yields decrease the opportunity cost of holding non-yielding yellow metal and support the gold prices. The precious metal was also supported on the day because of the concerns over a recovery in the U.S. labor market and the Delta variant of the coronavirus.

On the data front, at 17:30 GMT, the Unemployment Claims from the U.S. for last week surged to 373K against the projected 345K and weighed on the U.S. dollar that helped gold remain green for the day. The rising number of jobless claims from Americans depicted a weak U.S. labor recovery that weighed on the U.S. dollar and helped gold prices on Thursday. Meanwhile, the fight against the coronavirus pandemic in some wealthier nations has become a race between the rollout of vaccines and the highly contagious delta variant. As per the U.S. Centers for Disease Control and Prevention, the researchers were struggling to confirm the effectiveness of vaccines against the highly contagious variant of the coronavirus that was first identified in India, the Delta variant, which accounts for more than half of the new cases in the U.S.

According to the Health Ministry of Israel, the Pfizer & BioNTech vaccine, which is considered one of the most effective shots, offered only 64% protection against the Delta variant. Given the rising spread of this variant, Sydney extended its lockdown by a week till July 16; Singapore announced that it would not use Sinovac to its people in its national vaccine campaign. The United States reported to dispatch 2 million Moderna vaccine doses to Vietnam, Turkmenistan made the coronavirus vaccination mandatory for all adults. At the same time, England’s chief medical officer warned of a rise in long-covid in which symptoms persist for months among young people.

The Hype around the Delta variant caused a sudden increase in the value of yellow metal prices after Pfizer Inc. revealed its plans to U.S. regulators to authorize a booster dose of its coronavirus vaccine within the next month. The spread of the extremely contagious Delta variant and the risks of reinfection six months after inoculation urged scientists to recommend a booster shot of the vaccine. However, the U.S. Food and Drug Administration and the Centers for Disease and Control Prevention said in a joint statement that Americans who have been fully vaccinated do not need a booster coronavirus vaccine shot at this time.

Gold Intraday Technical Level

Support Resistance

1792.54 1817.34

1780.97 1830.57

1767.74 1842.14

Pivot point: 1805.77

Gold - XAU/USD - Technical Outlook

On Monday, the precious metal gold is trading with a bearish bias at a 1,799 level. On the 4 hour timeframe, the precious metal gold has violated the upward channel at 1,803, which is now adding strong selling pressure on gold. On the downside, the precious metal's support level prevails at 1,796, and this exposes gold price towards 1,789 level. The lagging technical indicator 50 EMA is supporting a selling bias in gold along with the leading MACD indicator that's exhibiting a bearish crossover. Both of the technical tools are in favor of a selling bias. Speaking about the technical sice, gold has closed three black crows patterns on the 4-hour chart supporting strong bearish bias among investors. All the best!